A feast for litigators: Fallout from the UBS-Credit Suisse merger
13 May 2024

A feast for litigators: Fallout from the UBS-Credit Suisse merger

As AT1 bondholders use “the world’s best, most expensive lawyers” to take on the Swiss financial regulator, what lessons does the Swiss bank merger provide?

On Sunday 19th March 2023, the unthinkable happened in Switzerland: Credit Suisse (CS) announced that it had entered into a merger agreement with UBS. This was no ordinary merger, but arguably the only viable emergency solution following a crisis of confidence and heavy deposit withdrawals. Ultimately, a catalogue of scandals and sustained financial losses at CS had led the two titans of Swiss banking to become one via a state-brokered deal – the biggest banking merger since the global financial crisis. Following the intervention of the Swiss Federal Department of Finance, the Swiss National Bank and the Swiss Financial Market Supervisory Authority (FINMA), UBS emerged as the ‘surviving entity’ from a fraught weekend of negotiation.

A triumph of Swiss efficiency, it was achieved in no small part thanks to the lawyers who worked at great speed to get the deal over the line before the markets opened on Monday morning, thereby avoiding a potential disaster. But on any view, the deal was fairly disastrous for CS shareholders and a genuine bargain for UBS, which paid the modest sum of $3.6bn for a bank that had an estimated tangible book value of around $33bn. Things were even worse for CS bondholders. While CS shares at least retained some value, albeit much reduced, additional tier one (AT1) bonds became entirely worthless.


Related News

May 2024 News

Switzerland: Still resilient and reliable?

Like the country in which they operate, Swiss law firms seem immune to adversity beyond their borders. So, how do they do they manage it?

May 2024 News

Germany’s distress: Switzerland needs the sick man of Europe to recover

As the German economic miracle gives way to stagnation and a real estate crisis, can Switzerland remain immune to the challenges facing its giant neighbour?

May 2024 News

Swiss regulation: The privacy vs transparency debate rages on

New data protection law and anti-money laundering proposals that impact law firms’ privacy – how is Switzerland managing to square the circle?

February 2024 News

Diversity: The way we were

What is diversity? Despite a multiplicity of available definitions, there is no straightforward answer to this apparently simple question. Indeed, the 5.6 billion results provided by a quick Google search of the word shows that diversity ranks midway between comparable searches for the word God (6.6 billion) and religion (4.6 billion).